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Flat Man Co - Ltd by guarantee - Distribution

How do the guarantor members treat the receipt from the company?

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Property has 6 flats, 5 of which have owners with an interest in the limited by guarantee company that owns the freehold.  The 1 that doesn't  exercised the right to extend its lease,  so giving a large cash inflow to the company.  The profit appears to be tax free in the company. 

The 5 people want all the profit paid out.  The company can distribute profit.  But how is the receipt treated in the hands of the individuals?  It's not a dividend but could it be taxed as such?  It's not earned income nor is it ever going to reoccur, at least not for 150 years, could it be a tax nothing and hence tax free? 

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By Tax Dragon
10th Jul 2019 16:21

So much wrong with that question I don't know where to start...

… oh yes, why anonymous?

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Replying to Tax Dragon:
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By Vedute
10th Jul 2019 17:04

Nos sure there's much difference between Anonymous and made up name like yours?

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Replying to Vedute:
RLI
By lionofludesch
10th Jul 2019 17:41

Quote:

Nos sure there's much difference between Anonymous and made up name like yours?

Well, yes, there is, because you can see all the posts Tax Dragon has made. Which you can't do with Anonymous - unless you assume that Anonymous is the most prolific querist on the forum.

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By Wanderer
10th Jul 2019 16:29

Quote:

The profit appears to be tax free in the company. 

Why's that then?
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Replying to Wanderer:
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By Vedute
10th Jul 2019 17:05

Why not ask a question under a new heading ?

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Replying to Vedute:
Stepurhan
By stepurhan
10th Jul 2019 17:13

Quote:

Why not ask a question under a new heading ?

What an odd response.

I am assuming you are the OP (so no longer anonymous, apart from your made-up name). The question is a straightforward one. On what basis are saying the profit the company has made is not a taxable one? That is rather an important question to answer first.

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Replying to stepurhan:
RLI
By lionofludesch
10th Jul 2019 17:43

Quote:

Quote:

Why not ask a question under a new heading ?

What an odd response.

No, no. It makes perfect sense to ask a follow-up question on a separate thread when I come to think about it.

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By daniel_
11th Jul 2019 20:48

If the freehold is owned by the company and it extends a lease then it has made a disposal and you should calculate the chargeable gain and include in the company's CT return.

The company pays CT on the gain and the rest could be paid out as a dividend.

Have you googled something like "management company lease gain" yet? I'm sure the answers you seek are out there already.

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Psycho
By Wilson Philips
11th Jul 2019 22:44

To answer one of the questions, yes the distribution of profit will be taxed as if it were a dividend.

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